oversight

USDA Information Management: Extensive Improvements Needed in Managing Information Technology Investments

Published by the Government Accountability Office on 1997-05-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Department Operations,
                          Nutrition, and Foreign Agriculture, Committee on
                          Agriculture, House of Representatives


For Release on Delivery
Expected at
9:30 a.m.
                          USDA INFORMATION
Wednesday,
May 14, 1997              MANAGEMENT

                          Extensive Improvements
                          Needed in Managing
                          Information Technology
                          Investments
                          Statement of Joel C. Willemssen
                          Director, Information Resources Management
                          Accounting and Information Management Division




GAO/T-AIMD-97-90
             Mr. Chairman and Members of the Subcommittee:

             We are pleased to be here today to assist the Subcommittee in its oversight
             of the Department of Agriculture’s (USDA) planning and management of its
             information technology (IT) resources; spending for IT resources currently
             totals over $1 billion annually. As requested, this morning I will discuss the
             need for USDA to address its long-standing difficulties in managing its
             substantial investments in information technology, and provide specific
             examples taken from our reports of USDA’s inadequate management of
             information technology investments that resulted in millions of taxpayer
             dollars being wasted. In doing so, I will also provide a perspective on what
             we believe to be a major cause of these problems and discuss
             recommendations we have made to address these problems. I will then
             briefly discuss recent legislation that provides a framework for making
             sound IT investments in the future, which was based, in part, on practices
             we identified that were being followed by leading organizations that have
             successfully used technology to dramatically improve performance and
             meet strategic goals.1 I will also touch briefly on the Department’s current
             moratorium on information technology acquisitions.


             The influence of USDA on millions of Americans makes it essential that the
Background   Department plan and manage its information technology wisely. USDA’s
             size and complexity, however, make this far from simple. The fourth
             largest federal agency, USDA employs over 100,000 individuals in 30
             separate component agencies having multiple and sometimes disparate
             missions. Its responsibilities range from forests and timber to food
             assistance for the needy and the safety of meat and poultry products for
             human consumption. In fiscal year 1997 alone, USDA outlays will total
             about $57 billion. Over the past 10 years, USDA has reported spending about
             $8 billion on IT resources. During this time, as depicted below, USDA has
             seen its annual IT expenditures nearly double, from about $560 million to
             over $1 billion.




             1
              Executive Guide: Improving Mission Performance Through Strategic Information Management and
             Technology (GAO/AIMD-94-115, May 1994).



             Page 1                                                                     GAO/T-AIMD-97-90
Figure 1: USDA IT Expenditures for the Past 10 Years (Fiscal Years 1987 Through 1996)




                                           Source: The Department of Agriculture. This information has not been independently verified by
                                           GAO.




                                           To put this figure in perspective, this $1 billion expenditure equates to
                                           spending over $2.7 million every day of the year. Besides purchases of
                                           computer hardware, software, and supplies, USDA spends a significant
                                           amount annually for services, especially those to support its information
                                           technology purchases. These include such items as contractor
                                           maintenance on systems or development of computer applications.
                                           Another major portion of USDA’s IT expenditures goes toward personnel;
                                           this outlay makes up about 30 percent of the total information technology




                                           Page 2                                                                        GAO/T-AIMD-97-90
budget. In fiscal year 1996, USDA reported having about 6,200 full-time
equivalent employees in the IT resource area.

Another large portion of USDA’s information technology expenditures
covers intra-governmental payments, which mostly comprises payments to
states for computer systems to administer the food stamp program. USDA’s
reported fiscal year 1996 spending for major categories is shown below in
figure 2.




Page 3                                                      GAO/T-AIMD-97-90
Figure 2: USDA’s Fiscal Year 1996 IT Expenditures, by Major Category




                                          Source: The Department of Agriculture. This information has not been independently verified by
                                          GAO.




                                          For fiscal year 1997, USDA plans to increase its IT expenditures to about
                                          $1.1 billion, and has requested about $1.2 billion for fiscal year 1998.




                                          Page 4                                                                        GAO/T-AIMD-97-90
                          Although USDA has reported spending nearly $8 billion on information
USDA Does Not             technology resources over the past 10 years, it has not effectively planned
Effectively Plan or       or managed these IT investments and, as a result, has wasted millions of
Manage Its                dollars. Mr. Chairman, I would now like to highlight a number of specific
                          examples taken from our reports issued during this period, in which we
Substantial               found that USDA had not effectively planned major
Investments in            computer-modernization activities or managed IT resources.
Information           •   In June 1990 we reported that the Forest Service was not ready to procure
Technology                a $1.2 billion geographic information system because alternatives for
                          integrating this nationwide system into its existing operations had not
                          been adequately analyzed, and system performance needs had not been
                          adequately defined.2 We concluded an unnecessary risk existed that the
                          proposed system would not be effective and cost-beneficial in meeting the
                          agency’s mission needs. The Forest Service took actions to address our
                          concerns and agreed to undertake a pilot program to reduce risk, which it
                          completed last fall. The Forest Service is now preparing to move forward
                          on this procurement.
                      •   Later, in September 1990, we reported that ineffective project management
                          and oversight contributed to cost growth, schedule delays, and user needs’
                          not being met for USDA’s grain and processed commodity inventory
                          systems.3 Cost estimates grew to almost 9 times the original estimates,
                          from $7 million to $62 million; one system was installed 2 years later than
                          planned, while the other was installed more than 6 years behind schedule.
                      •   Then, in October 1991 we reported that the Farmers Home Administration
                          faced unacceptable risks by proceeding with a $520 million project to
                          modernize automated systems for making and collecting loans because
                          project plans were not based on a strategic business plan that articulated
                          how the agency would operate in the future, such as handling the impact
                          of expected changes to loan management operations.4 USDA canceled this
                          procurement after issuance of our report.
                      •   Similarly, we testified in June 1992 that restructuring the Department
                          would affect the farm service agencies’ automation plans, which included
                          four USDA agencies planning separate information technology
                          modernization projects; together, they planned to spend about $2 billion


                          2
                           Geographic Information System: Forest Service Not Ready To Acquire Nationwide System
                          (GAO/IMTEC-90-31, June 21, 1990).
                          3
                           Information Resources: Management Improvements Essential for Key Agriculture Automated Systems
                          (GAO/IMTEC-90-85, Sept. 12, 1990).
                          4
                           ADP Modernization: Half-Billion Dollar FmHA Effort Lacks Adequate Planning and Oversight
                          (GAO/IMTEC-92-9, Oct. 29, 1991)



                          Page 5                                                                       GAO/T-AIMD-97-90
    between 1993 and 1997 on separate IT acquisitions.5 At that time, we
    testified that such investments were unwise given the likelihood of some
    changes to the USDA field structure and new ways of doing business. The
    Senate Committee on Agriculture, Nutrition and Forestry agreed, and, at
    its urging, the Department postponed these acquisitions and later
    established a consolidated, multiagency program. USDA allowed the
    Federal Crop Insurance Corporation’s (FCIC) $62 million IT modernization
    effort to continue on the basis that it was needed to ensure continued
    delivery of crop insurance to farmers.
•   We reported in March 1993, however, that FCIC could not demonstrate that
    its nationwide project was required to meet immediate needs, and that it
    had not even identified what those needs were.6 Uncertainties about FCIC’s
    future, including the restructuring of USDA and reforms in the crop
    insurance program, created formidable risks for FCIC’s planned nationwide
    computer acquisition project. We therefore recommended that FCIC cancel
    its nationwide acquisition, which it did, and pursue instead lower risk
    options to meeting immediate needs once identified. We also
    recommended that FCIC evaluate the possibility of incorporating its IT
    modernization into USDA’s consolidated program, which was just getting
    underway and came to be known as Info Share.

    However, as you know Mr. Chairman, USDA experienced more than its
    share of problems with the Info Share program it began in April 1993. This
    program was the biggest, most costly, and most challenging modernization
    attempt in USDA’s history; it promised to improve operations and delivery
    of services to customers of farm service and rural development agencies
    by reengineering business processes and developing integrated
    information systems. At the time, the Secretary of Agriculture announced
    that customer services would be improved through “one-stop” shopping
    for farm services.

    As we reported in August 1994, the $2.6 billion Info Share program was
    basically being managed as a vehicle for acquiring new technology, rather
    than as a true opportunity for reengineering business processes to better
    serve farm service customers.7 The concept of one-stop shopping had not
    been clearly defined and USDA managers were not performing the key steps


    5
     Department of Agriculture: Restructuring Will Impact Farm Service Agencies’ Automation Plans and
    Programs (GAO/T-IMTEC-92-21, June 3, 1992).
    6
     Crop Insurance Program: Nationwide Computer Acquisition Is Inappropriate at This Time
    (GAO/IMTEC-93-20, Mar. 8, 1993).
    7
     USDA Restructuring: Refocus Info Share Program on Business Processes Rather Than Technology
    (GAO/AIMD-94-156, Aug. 5, 1994).



    Page 6                                                                        GAO/T-AIMD-97-90
necessary to fundamentally improve the way these agencies do business.
Therefore, we concluded that unless USDA concentrates on reengineering
business processes, the Department risked spending hundreds of millions
of dollars to further automate its current way of doing business and not
meeting future needs.

Following our report on Info Share, the General Services Administration
(GSA) canceled USDA’s procurement authority for this project, and the
Office of Management and Budget (OMB) placed Info Share on its list of
high-risk programs that it kept at the time. However, by that time, as
reported by USDA’s Office of Inspector General, over $100 million had been
spent on the project during fiscal years 1993 and 1994.8 Although USDA took
measures to restart the program by hiring a new program manager and
setting up a program office in January 1995, the Inspector General
reported 4 months later that a need for strengthened leadership and
direction of Info Share at the most senior levels of the Department was
clear. After millions more dollars were spent, USDA finally disbanded Info
Share in December 1995 and moved the program’s key objectives to the
Department’s service center implementation effort.

For the substantial investment made in Info Share, USDA had little to show
in the way of reengineered processes or integrated information systems.
Moreover, despite agreeing with our recommendations to refocus Info
Share to ensure that business processes were reengineered, USDA
continued to request additional funds to acquire new computer systems
without determining how to best deliver services to its customers.

USDA  has continued the objectives of Info Share under its service center
implementation program; its goal is to restructure operations at 3,700
locations to create a network of about 2,500 “one-stop” centers.
Unfortunately, even though USDA hopes to have all of these service centers
fully operational by the end of this year, the Department has yet to
articulate a clear vision of how services are to be delivered in these
centers and exactly what “one-stop” service entails. While the names of the
projects have changed, two facts have remained constant: (1) USDA still
has not reengineered business processes or established integrated
information systems and (2) it continues to spend additional millions of
dollars on IT.

The need to streamline and consolidate systems also applies to the
Department’s financial information. As we reported in September 1995,

8
 Monitoring of the Info Share Program (USDA/OIG Report 50530-1HQ, May 4, 1995).



Page 7                                                                      GAO/T-AIMD-97-90
many of USDA’s financial management systems problems would remain
unresolved until the Department’s systems were brought into compliance
with USDA’s financial standards.9 Further, absent from the Department’s
Financial Information Systems Vision and Strategy was any mention of
eliminating or consolidating over 100 separate USDA financial management
systems that perform overlapping functions or of reengineering its
financial management processes. Most of these systems are managed by
USDA’s agencies and its National Finance Center; in fiscal year 1994, USDA
spent about $187 million to operate and maintain these over-100 separate
systems. To our knowledge, USDA still has not implemented our
recommendations that it eliminate or consolidate redundant financial
management systems across agencies.

Ineffective management of the Department’s $100 million annual
telecommunications investment has also resulted in wasting millions of
taxpayer dollars. As we reported in April 1995, USDA has hundreds of field
office sites where multiple USDA agencies, located within the same
building, obtain and use separate, and often redundant,
telecommunications services.10 While USDA had identified opportunities to
consolidate and optimize telecommunications resources for substantial
savings, the Department had not acted on these opportunities and, as a
result, at the time of our review, was wasting as much as $5 million to
$10 million annually. We noted that USDA’s Office of Information Resources
Management, which has responsibility for managing the Department’s
telecommunications, had not effectively carried out its responsibility.

Unfortunately, Mr. Chairman, lax Departmentwide leadership and
oversight of USDA’s telecommunications investments have resulted in even
further waste. In September 1995, we reported that USDA was wasting
millions of dollars each year paying for unnecessary or unused
telecommunications equipment and services because the Department had
not cost-effectively managed its telecommunications resources.11 For
example, because of breakdowns in management controls, for several
years prior to our audit, USDA was paying tens of thousands of dollars
annually for leased telecommunications equipment, such as rotary
telephones and outdated computer modems, that it no longer even had. In


9
 USDA Financial Systems: Additional Actions Needed To Resolve Major Problems (GAO/AIMD-95-222,
Sept. 29, 1995).
10
    USDA Telecommunications: Missed Opportunities To Save Millions (GAO/AIMD-95-97, Apr. 24, 1995).
11
 USDA Telecommunications: Better Management and Network Planning Could Save Millions
(GAO/AIMD-95-203, Sept. 22, 1995) and USDA Telecommunications (GAO/AIMD-95-219R, Sept. 5,
1995).



Page 8                                                                        GAO/T-AIMD-97-90
but one of the many cases we identified, a USDA agency had paid a total of
about $84,000 over 8 years to lease 16 modems that agency staff told us
were long outdated and likely disposed of years earlier. Another USDA
agency continued to pay about $500 a month for telecommunications
services for an office that had been closed for more than a year, and had
paid as much as $6,200 for these services at the time we reported this.

Mr. Chairman, we are convinced that without our reports on these
problems, USDA would have continued paying tens of thousands of dollars
annually for telephone equipment and services that it no longer needed or
could not even locate. Given these serious management weaknesses, we
recommended that the Secretary report the Department’s management of
telecommunications as a material internal control weakness under the
Federal Managers’ Financial Integrity Act and take other corrective
actions, including stopping payments for the unnecessary services and
leased equipment.

Unfortunately, USDA problems managing telecommunications do not end
there. In April 1996, after we uncovered hundreds of cases of telephone
abuse and fraud at the Department, we also reported that USDA lacked
adequate controls over the millions of dollars it spends each year on
commercial telephone services.12 Many of these cases involved
inappropriate collect calls made from individuals in 18 correctional
institutions, accepted and paid for by USDA, and then possibly transferred
to other USDA long-distance lines.

We have made numerous recommendations in our reports to address and
help USDA correct the problems it has encountered. However, the
Department has not yet fully implemented several of our
recommendations, especially those we made over the last 3 years on Info
Share, telecommunications, and financial systems. While some actions are
underway, we cannot at this time be sure they will fully address all our
concerns. In the case of Info Share, for instance, USDA last fall initiated four
reengineering efforts for the farm service agencies, but in doing so did not
implement our 1994 recommendations to require top-level managers to be
directly and personally involved and responsible for directing the activity,
or that the Department designate a senior manager to be responsible for
managing these efforts.




12
 USDA Telecommunications: More Effort Needed to Address Telephone Abuse and Fraud
(GAO/AIMD-96-59, Apr. 16, 1996).



Page 9                                                                   GAO/T-AIMD-97-90
                      In light of these numerous examples, you can see Mr. Chairman, that USDA
Perspective on a      has had a history of IT problems dating back to the 1980s. While many
Major Cause of        factors have contributed to this, a major cause that often surfaced is a lack
USDA’s Information    of strong information resources management (IRM) leadership,
                      accountability, and oversight of the acquisition and use of Departmental IT
Technology Problems   investments. Let me quote from one of our reports:

                      “USDA needs to better manage its computer and information resources if it is to meet the
                      demands of its users. Restructuring its ADP [automated data processing] organization under
                      a senior official with strengthened authority is a must if USDA is to deal with the many
                      information resources problems it faces. . . . The existing ADP organization does not provide
                      adequate planning, control, direction, and accountability. . . [and] it has no authority over
                      agency in-house development efforts. . . . For several years problems have been identified
                      in USDA’s management and use of information resources. Yet, little has been done to solve
                      these problems.”


                      This was taken from our June 1981 report on USDA’s management
                      leadership over information resources.13 Unfortunately, many of these
                      statements still apply. While the senior officials at USDA responsible for the
                      Department’s IT resources have changed over the past 16 years, recurring
                      problems in planning and managing information technology have not, and
                      these problems continue to plague the Department.

                      Our management review of USDA in 1989 also highlighted the need for
                      strong leadership from top management to overcome serious,
                      long-standing organizational weaknesses.14 Specifically, while USDA’s
                      Office of Information Resources Management had responsibility for
                      Departmentwide planning and management of information technology, it
                      lacked the authority necessary to overcome the problems caused by USDA’s
                      traditional approach to managing information resources: Its agencies are
                      independent and their interests parochial in terms of managing these
                      resources. In this 1989 report, we also noted that the budget remained a
                      creature of the individual agencies’ priorities and missions, where
                      hundreds of appropriations accounts exist, limiting considerably the
                      Secretary’s flexibility.

                      In July 1991, continuing our series of management reviews at USDA, we
                      noted once again that the agencies within USDA have always defined their


                      13
                       Department of Agriculture Needs Leadership in Managing Its Information Resources
                      (GAO/CED-81-116, June 19, 1981).
                      14
                       U.S. Department of Agriculture: Interim Report on Ways To Enhance Management
                      (GAO/RCED-90-19, Oct. 26, 1989).



                      Page 10                                                                      GAO/T-AIMD-97-90
own requirements and then planned and implemented systems, with little
Departmental oversight or accountability.15 Because of this, we highlighted
numerous examples of faulty information systems being developed that
did not allow data sharing or provide managers with the information they
needed to effectively manage their programs. To overcome these
problems, we again recommended that USDA exercise stronger central
leadership and oversight to ensure effective systems planning and provide
for better accountability over agency expenditures for information
technology.

Other oversight agencies have also reported on these problems. For
example, the GSA’s fiscal year 1994 Information Resources Procurement
and Management Review of USDA highlighted the need for the Department
to overcome many of the same barriers we have pointed out over the
years.16 Specifically, GSA discussed the need for strong, sustained executive
leadership in IT planning to overcome the Department’s stovepipe
approach and for managers at all levels to be accountable for prudent IT
investing. Likewise, reports issued by USDA’s Office of Inspector General,
including one in March 1993, also discuss serious problems in planning
major IT acquisitions because of ineffective and weak central oversight of
these activities by the Department.17

Because of the lack of strong IRM leadership, accountability, and oversight,
USDA agencies have continued to plan, acquire, and develop separate
systems, independently, without considering opportunities to integrate
systems and share data. Consequently, over time, the Department has
invested hundreds of millions of dollars in hundreds of stovepipe
systems—many poorly planned. These are systems that are not
interoperable with other agency systems, and actually inhibit the use and
sharing of information. In fact, data are often inaccessible and
underutilized outside of, and even within, USDA’s agencies for identifying
problems, analyzing trends, or assessing crosscutting programmatic and
policy issues. Even after the Congress passed the 1990 Farm Bill that
specifically required USDA to integrate various databases that relate to
agriculture program data, USDA did not do so, and its agencies continue to



15
 U.S. Department of Agriculture: Strengthening Management Systems To Support Secretarial Goals
(GAO/RCED-91-49, July 31, 1991).
16
 Information Resources Procurement and Management Review: Department of Agriculture (GSA,
FY94).
17
 Office of Information Resources Management Departmental Controls Over Major IRM Acquisitions
(USDA/OIG Report 58001-1-FM, Mar. 31, 1993).



Page 11                                                                      GAO/T-AIMD-97-90
                     have separate databases that are not integrated and do not share
                     information.

                     As a result of this stovepipe approach to planning and managing IT, we see
                     the Department as data-rich but information-poor. For example, in the fall
                     of 1991, when the Ranking Minority Member of the Senate Agriculture
                     Committee asked three questions on where staff reside under the current
                     structure, how much of the taxpayer dollars are they spending, and what
                     work they perform, the Department could not give accurate information in
                     a timely fashion. Similarly, in 1993 when we requested basic information
                     on major systems under development at USDA, the Department did not have
                     the data readily available, and it took 2 months before USDA supplied the
                     information, after making a special request to the agencies.18

                     This situation still exists, as we found when preparing for this testimony.
                     Specifically, when we asked the Department for the total number of
                     contracting officers at USDA, the headquarters office responsible for
                     ensuring that these officers are certified did not know either the number
                     of officers or who they were, noting that they delegated these
                     responsibilities to USDA component agencies.19


                     After a decade of poor information technology planning and program
Recent Legislation   management by federal agencies, as just described for USDA, the Congress
Aims to Strengthen   enacted the Clinger-Cohen Act of 1996, which, in part, seeks to strengthen
Leadership and       executive leadership in information management and institute sound
                     capital investment decision-making to maximize the return on information
Improve Investment   systems investments. It is important to note that just as technology is most
Decision-making      effective when it supports defined business needs and objectives,
                     Clinger-Cohen will be more powerful if it can be integrated with the
                     objectives of broader governmentwide management reform legislation that
                     USDA is also required to implement.


                     One such reform is the Paperwork Reduction Act of 1995 (PRA), which
                     emphasizes the need for an overall information resources management
                     strategic planning framework, with IT decisions linked directly to mission
                     needs and practices. Another reform is the Chief Financial Officers Act of


                     18
                      Information Resources: USDA Lacks Data on Major Computer Systems (GAO/AIMD-94-31, Oct. 21,
                     1993).
                     19
                      However, in our February 1997 report on USDA’s contracting activities we obtained information on
                     contracting personnel at a number of the component agencies. See USDA Procurement: Information
                     on Activities During Fiscal Year 1996 (GAO/RCED-97-61R, Feb. 18, 1997).



                     Page 12                                                                       GAO/T-AIMD-97-90
    1990, which requires that sound financial management practices and
    systems essential for tracking program costs and expenditures be in place.
    Still another reform is the 1993 Government Performance and Results Act
    (GPRA), which focuses on defining mission goals and objectives, measuring
    and evaluating performance, and reporting results. Together,
    Clinger-Cohen and these other laws provide a powerful framework under
    which federal agencies, such as USDA, have the best opportunity to improve
    the management and acquisition of information technology.

    A USDA that works better and costs less in the 21st century must have
    efficient and effective information systems. We believe that if properly and
    fully implemented, the requirements of Clinger-Cohen and PRA should help
    the Department make real change and improve the way it acquires IT and
    manages these investments. These acts emphasize

•   involving senior executives in information management decisions,
•   establishing senior-level chief information officers (CIO),
•   tightening controls over technology spending,
•   redesigning inefficient work processes, and
•   using performance measures to assess technology’s contributions to
    achieving mission-related results.

    As we have long recognized in many of our past reports on USDA, executive
    leadership is critical for improving the management of technology, and
    both PRA and Clinger-Cohen make agency heads directly responsible for

•   establishing goals for using information technology to improve the
    effectiveness of agency operations and services to the public,
•   measuring the actual performance and contribution of technology in
    supporting agency programs, and
•   including with their agencies’ budget submissions to OMB a report on their
    progress in meeting operational improvement goals through technology.

    USDA has begun taking steps toward meeting the Clinger-Cohen mandates.
    As I will discuss, however, much remains to be done by USDA to fully
    implement the act’s various provisions. The Department still has not
    developed a project plan outlining critical tasks, resource needs, and
    specific time frames and milestones for full implementation; this will be an
    important step in guiding the Department’s effort to implement the
    Clinger-Cohen provisions, as the actions that remain will be neither easy
    nor quick. They will require a significant amount of time and commitment
    by many at the Department, particularly USDA’s most senior managers.



    Page 13                                                     GAO/T-AIMD-97-90
                       I would now like to briefly discuss the specific provisions of the
                       Clinger-Cohen Act and the steps that USDA has taken to start meeting the
                       provisions of the act; I will then provide our observations on the
                       implementation challenges facing the Department.


Capital Planning and   Under this section of the Clinger-Cohen Act, USDA is required to design
Investment Control     and implement a process for maximizing the value and assessing and
                       managing the risks of information technology acquisitions. This process
                       is supposed to be integrated with the processes for making budgetary,
                       financial, and program management decisions, and include criteria to
                       be applied in considering whether to undertake a particular investment
                       in information systems. Moreover, the process is to provide for
                       (1) identifying information systems investments that would result in
                       shared benefits or reduced costs for other government agencies,
                       (2) identifying quantifiable measurements of benefits and risks of
                       proposed investments, and (3) the means for senior management to
                       obtain information on the progress of information systems investments.

                       While USDA has begun to act in this area, it is still designing the specific
                       elements and criteria for its capital planning and investment control
                       process. In light of this, and because no specific time frames or milestones
                       yet exist, it is unclear at this time precisely how the Department’s process
                       will operate, or when the Department will be ready to fully implement it.

                       Part of USDA’s overall capital planning and investment control process will
                       include its Executive Information Technology Investment Review Board,
                       which the Secretary authorized last July. It was given responsibility for
                       selecting, monitoring, and evaluating Departmentwide technology
                       investments; members include the Department’s most senior program
                       officials. The board first met this past January and has met several times
                       since then, but has not yet adopted specific operating procedures,
                       including how and to what extent it will be involved in evaluating and
                       approving ongoing and planned IT programs.

                       This past February, we issued a comprehensive guide for agencies such as
                       USDA to use in assessing how well they are selecting and managing their
                       information technology resources.20 This guide, based on best practices
                       used by public and private organizations, can be instrumental in helping
                       USDA identify specific areas for improving its investment process to


                       20
                        Assessing Risks and Returns: A Guide for Evaluating Federal Agencies’ IT Investment
                       Decision-making (GAO/AIMD-10.1.13, February 1997).



                       Page 14                                                                       GAO/T-AIMD-97-90
                        maximize the returns on technology spending while better controlling
                        systems development risks. Officials in USDA’s office of the CIO told us that
                        they are using GAO’s guide along with other guidance in developing their
                        capital planning and investment control process.


Performance-Based and   Under this section of Clinger-Cohen, to implement performance and
Results-Based           results-based management for information technology, USDA is required
Management              to establish goals for improving the efficiency and effectiveness of
                        agency operations through the effective use of information technology,
                        and to report to the Congress on its progress in achieving these goals.
                        USDA is also required to revise mission-related and administrative
                        processes before making significant investments in information
                        technology, and to ensure that performance measures are prescribed for
                        gauging how well the technology supports USDA programs.

                        USDA   is also in the early stages of addressing these requirements, and it is
                        still unclear at this time how the Department will fully implement all of
                        them. From our perspective, these requirements may be the most difficult
                        and time-consuming to implement and will demand full commitment and
                        involvement from senior managers for USDA’s mission areas.

                        In establishing the mission-based goals and performance measures for IT
                        investments, USDA will need to make sure that these are aligned with the
                        long-term strategic goals and performance measures it is currently
                        developing under GPRA. In a February 1997 report to the House Agriculture
                        Committee, we discussed the status of USDA’s actions to meet the GPRA
                        requirements and noted that it planned to consult with the Congress some
                        time this spring after its draft Departmentwide strategic plan has been
                        reviewed by OMB and the Secretary.21

                        Revising mission-related processes can achieve dramatic changes in
                        overall performance and customer satisfaction when the processes are
                        fundamentally redesigned to achieve more effective and efficient program
                        results. It is a formidable undertaking and entails difficult, strenuous work
                        because it requires an organization’s managers and employees to change
                        how they think and work. Historically, however, USDA has not been
                        successful in obtaining the necessary commitment and involvement from
                        senior managers in revising mission-related processes. For example, as
                        previously mentioned, despite the importance of senior management
                        involvement to fundamentally improve the way the agencies do business,

                        21
                          USDA Management: Progress in Meeting GPRA’s Requirements (GAO/RCED-97-65R, Feb. 26, 1997).



                        Page 15                                                                   GAO/T-AIMD-97-90
                           Departmental managers were not directly and personally involved and
                           responsible under Info Share. Now, 2 and a half years after our report,
                           USDA is starting to move forward with its first projects to revise farm
                           service agency processes; if done right, the Department can make
                           dramatic changes and achieve significant cost savings in how it will
                           operate in the 21st century as it establishes one-stop service centers.


Agency Chief Information   Under this section, to help USDA carry out the new responsibilities
Officer                    discussed in the previous two sections, the Secretary of Agriculture is
                           required to designate a chief information officer. The CIO is to be much
                           more than a senior technology manager. As a top-level executive
                           reporting directly to the agency head, the CIO is supposed to be
                           responsible for achieving mission results through technology by working
                           with senior managers on effective management to achieve the agency’s
                           strategic performance goals. Moreover, the CIO is to promote
                           improvements in work processes and develop and implement an
                           integrated, agencywide technology architecture. The CIO is also required
                           to monitor and evaluate the performance of information technology
                           programs, and advise the head of the agency whether to continue,
                           modify, or terminate a program or project. Further, the CIO is
                           responsible for strengthening the agency’s knowledge, skills, and
                           capabilities to effectively manage information resources.

                           USDA has taken steps to begin implementing requirements in this area. In
                           August 1996 the Secretary established a CIO position and designated an
                           acting CIO, who reports to the Secretary. The CIO has been given
                           responsibility for supervising and coordinating the design, acquisition,
                           maintenance, use, and disposal of information technology by USDA
                           agencies, and for monitoring the performance of USDA’s information
                           technology programs and activities. However, the Department still has not
                           established specific time frames or milestones for developing policies and
                           procedures describing how the CIO’s office will carry out these
                           responsibilities, or specified what the CIO’s authorities are for carrying out
                           the mandates of Clinger-Cohen and PRA.

                           It is to soon to tell whether USDA’s CIO will be able to effectively implement
                           the Clinger-Cohen and PRA requirements and direct how various USDA
                           component agencies, which control their own IT budgets, will make IT
                           investments and carry out their IT programs, as well as reengineer business
                           processes before acquiring new technology. The leadership demonstrated
                           by the CIO and the support this official receives from the Secretary will be



                           Page 16                                                       GAO/T-AIMD-97-90
critical for success. It will be equally important for the Secretary to hold
the CIO accountable for the many improvements the Clinger-Cohen Act
aims to deliver.

So far, the CIO’s office has developed an initial draft version of a high-level
information technology architecture. The acting CIO presented this initial
version to the review board in February 1997, and the board is still
considering it. USDA has still not yet established a specific time frame or
milestones for completing its architecture.

In our view, in order to complete a sound and integrated architecture,
substantial progress must first be seen in the performance and
results-based management area. Without first revising mission-related
processes, at least conceptually, USDA risks developing an information
systems technology architecture that supports the Department’s outdated
processes rather than one consistent with any future approach.

Revising mission-related processes may alter the architecture components
and severely affect information technology investment decisions. A case in
point is the revision of a mission-related loan servicing process at USDA.
After our October 1991 report, USDA canceled its $520 million Farmers
Home Administration effort to modernize automated systems for its highly
decentralized process for making and collecting single-family housing
loans. Since then, with pressure from the Congress, USDA has developed
and is implementing a new process for servicing these loans centrally,
known as the Dedicated Loan Origination and Servicing System. By
moving from a highly decentralized system to a centralized system, USDA
expects to reduce the number of offices necessary for carrying out this
process by about two-thirds—from about 2,200 in 1991 to about 800.
Revising the loan-servicing process significantly affected the Department’s
information technology investment decisions, since fewer and different
computers and telecommunications equipment were needed for
centralized servicing.

Once USDA is ready to implement its architecture, another critical
component will be establishing a systematic process for making necessary
adjustments to the architecture to reflect internal and external changes.
These changes may include elements such as the impact that the fiscal
year 1998 budget will have on information technology investment
decisions. This is especially true at USDA’s Farm Service Agency, since the
Department’s fiscal year 1998 budget request points out that by the end of
1999, a maximum of 2,000 field office service centers will exist, compared



Page 17                                                        GAO/T-AIMD-97-90
                      with more than 2,500 today. Other changes will include those
                      opportunities identified through an independent external examination of
                      operational efficiencies and cost savings from further coordinating Farm
                      Service Agency and Natural Resources Conservation Service activities that
                      USDA expects to undertake later this fiscal year. These include alternative
                      means of program delivery, such as centralizing servicing for Agriculture
                      Transition Marketing Act payments. Completing the architecture and
                      keeping it current is especially critical if it is to represent a sound and
                      integrated tool for guiding USDA’s investment decisions.

                      Full and effective implementation of this section of Clinger-Cohen also
                      provides, among other elements, potential benefits from sharing with
                      government entities beyond USDA. For example, USDA’s initial version of its
                      information architecture includes an illustration of candidate locations for
                      telecommunications equipment and services based on the locations where
                      major concentrations of USDA personnel work. At many of these locations,
                      however, other federal agencies, such as the Department of the Interior,
                      already have equipment and services in place that could possibly be
                      shared. If such opportunities to share resources exist and are ignored, the
                      chance to achieve potentially significant savings will be missed.


                      Finally, Mr. Chairman, a word about the Department’s moratorium on
Constraining          significant information technology investments. With the passage of
Information           Clinger-Cohen and concerns expressed in Senate and House
Technology Spending   appropriations and authorization language, the Deputy Secretary last
                      November established a moratorium on all significant information
While Implementing    technology investments. This was done to give the Department time to
Clinger-Cohen         assess its existing and planned IT investments and constrain IT spending
                      until it develops a Departmentwide information architecture and
                      implementation process. We applaud this action and view it as a
                      responsible beginning toward reigning in what too frequently has been
                      ill-advised information technology spending at USDA.

                      The acting CIO implemented the moratorium to include IT acquisitions over
                      $250,000 and any acquisition of telecommunications equipment regardless
                      of cost, with certain exemptions. These exemptions included renewals of
                      contracts for maintenance and support-services contracts for
                      mission-critical hardware, software, and applications, including those for




                      Page 18                                                     GAO/T-AIMD-97-90
year-2000 compliance.22 (USDA plans to spend about $190 million on
support services in fiscal year 1997.) We were also told that the
moratorium did not include funds that were obligated just prior to its
enactment. This is significant, because among others, USDA obligated about
$140 million in Commodity Credit Corporation funds at the end of fiscal
year 1996, which included about $70 million for telecommunications for
service centers.

Then there is the question of waivers. While operating under the
moratorium, as of April 23, 1997, agencies had submitted 46 requests for
waivers totaling about $82 million. The CIO’s office had either fully,
partially, or conditionally approved 34 of these waivers, totaling about
$33 million, and allowed 2 others, worth nearly $44 million for
maintenance and support services, to move ahead because they were
considered to be exempt. For the remaining 10 requests, only 3—requests
totaling $4,400 for telecommunications equipment—were denied; 6 of the
others were still in process, and another was returned because it was
incomplete.

At this time, USDA’s moratorium officially remains in effect. Initially, USDA
planned to lift the moratorium this past February on the basis that it would
have completed an information architecture. Since then, however, the
Deputy Secretary has continued the moratorium on a month-to-month
basis while the Department continues to work on refining the architecture
and developing a new Departmental capital planning and investment
control process for IT investments. While it is unclear when USDA expects
to have this process fully established, the Department has been developing
an interim, post-moratorium decision-making process for the agencies to
follow if the moratorium is lifted before the more detailed and extensive
Departmental capital planning and investment control process is
established.

Further, on January 27 of this year, the acting CIO suspended
telecommunications investments for the service center implementation
program, with the exception of those sites implementing centralized rural
housing loan servicing or having emergencies, until the Department can

22
  The year-2000 problem is rooted in the way dates are recorded and computed in many computer
systems. For the past several decades, systems have typically used two digits to represent the year,
such as “97” representing 1997, in order to conserve on electronic data storage and reduce operating
costs. With this two-digit format, however, the year 2000 is indistinguishable from 1900, 2001 from
1901, and so on. As a result of this ambiguity, system or application programs that use dates to perform
calculations, comparisons, or sorting may generate incorrect results when working with the years after
1999. Correcting the problem and achieving year-2000 compliance—defined as the ability of
information systems to accurately process date data from, into, and between the 20th and the 21st
centuries, including leap year calculations—will not be easy.



Page 19                                                                           GAO/T-AIMD-97-90
          assess the impact of the fiscal year 1998 budget on the number of field
          offices USDA will have. We support this action, which also remains in
          effect, since it is designed to prevent USDA from acquiring
          telecommunications equipment for sites that may close.

          At this time, USDA is still continuing to experience problems planning and
          managing IT investments. For example, in planning the purchase and
          installation of telecommunications equipment in the new service centers,
          USDA did not take appropriate steps to ensure that it met two of its major
          objectives—reducing telecommunications costs by consolidating lines and
          improving customer service by being able to transfer calls among agency
          staff at the service centers. Consequently, these major goals were not met
          when new telephone systems were initially installed. This past February,
          USDA began to take remedial action to address these problems by issuing
          procedures for centers to follow to reduce the number of unnecessary
          lines. USDA is still working out procedures for how staff will answer and
          transfer calls.


          In summary, Mr. Chairman, a USDA that works better and costs less in the
Summary   21st century must have efficient and effective information systems. Yet
          USDA has a long history of poorly planning and managing IT investments
          with the resulting loss of taxpayer dollars. Given USDA’s track record, it
          would be both appropriate and necessary for the Department to
          demonstrate to the Congress that measurable progress has been made to
          effectively implement Clinger-Cohen and other legislative mandates, and
          strengthen Departmentwide leadership, accountability, and oversight of
          the acquisition and use of IT investments before millions more are spent on
          additional investments. Until and unless USDA can do so, the Congress may
          wish to consider reducing or limiting USDA’s IT funding to only meeting
          critical information technology needs required to support ongoing
          operations. Otherwise, USDA risks continuing its legacy of wasting taxpayer
          dollars on IT investments that are poorly planned and managed, and being
          unable to operate effectively and effectively in the next century.


          Mr. Chairman, this concludes my statement. I would be happy to respond
          to any questions you or other members of the Subcommittee may have at
          this time.




          Page 20                                                     GAO/T-AIMD-97-90
Page 21   GAO/T-AIMD-97-90
Related Products


              USDA Information Management: Action Needed To Address Long-Standing
              Deficiencies (GAO/T-AIMD-97-56, Mar. 5, 1997).

              Assessing Risks and Returns: A Guide for Evaluating Federal Agencies’ IT
              Investment Decision-making (GAO/AIMD-10.1.13, February 1997).

              USDA Management: Progress in Meeting GPRA’s Requirements
              (GAO/RCED-97-65R, Feb. 26, 1997).

              USDATelecommunications: More Effort Needed to Address Telephone
              Abuse and Fraud (GAO/AIMD-96-59, Apr. 16, 1996).

              USDAFinancial Systems: Additional Actions Needed To Resolve Major
              Problems (GAO/AIMD-95-222, Sept. 29, 1995).

              USDATelecommunications: Better Management and Network Planning
              Could Save Millions (GAO/AIMD-95-203, Sept. 22, 1995).

              USDA   Telecommunications (GAO/AIMD-95-219R, Sept. 5, 1995).

              Monitoring of the Info Share Program (USDA/OIG Report 50530-1HQ, May 4,
              1995).

              USDA Telecommunications: Missed Opportunities To Save Millions
              (GAO/AIMD-95-97, Apr. 24, 1995).

              Review of Info Share Program Expenditures for Fiscal Years 1993 and
              1994 (USDA/OIG Report 50530-2-HQ, Jan. 17, 1995).

              Information Resources Procurement and Management Review:
              Department of Agriculture (GSA, FY94)

              USDARestructuring: Refocus Info Share Program on Business Processes
              Rather Than Technology (GAO/AIMD-94-156, Aug. 5, 1994).

              Information Resources Management in a Reconfigured U.S. Department of
              Agriculture (House Report 103-610), Committee on Government
              Operations, House of Representatives, July 19, 1994.

              Executive Guide: Improving Mission Performance Through Strategic
              Information Management and Technology (GAO/AIMD-94-115, May 1994).




              Page 22                                                        GAO/T-AIMD-97-90
Related Products




Information Resources: USDA Lacks Data on Major Computer Systems
(GAO/AIMD-94-31, Oct. 21, 1993).

Revitalizing USDA: A Challenge for the 21st Century (GAO/T-RCED-93-32,
Apr. 22, 1993).

Office of Information Resources Management Departmental Controls Over
Major IRM Acquisitions (USDA/OIG Report 58001-1-FM, Mar. 31, 1993).

Crop Insurance Program: Nationwide Computer Acquisition Is
Inappropriate at This Time (GAO/IMTEC-93-20, Mar. 8, 1993).

Department of Agriculture: Restructuring Will Impact Farm Service
Agencies’ Automation Plans and Programs (GAO/T-IMTEC-92-21, June 3, 1992).

Geographic Information System: Forest Service Has Resolved GAO
Concerns About Its Proposed Nationwide System (GAO/T-IMTEC-92-14,
Apr. 28, 1992).

ADP Modernization: Half-Billion Dollar FmHA Effort Lacks Adequate
Planning and Oversight (GAO/IMTEC-92-9, Oct. 29, 1991).

Farmers Home Administration: Half-Billion Dollar ADP Modernization
Lacks Adequate Planning and Oversight (GAO/T-IMTEC-92-2, Oct. 29, 1991).

U.S. Department of Agriculture: Strengthening Management Systems To
Support Secretarial Goals (GAO/RCED-91-49, July 31, 1991).

Forest Service Is Making Progress in Developing a Nationwide Geographic
Information System (GAO/T-IMTEC-91-11, Apr. 24, 1991).

Management Improvements Essential for Key Automated Systems at the
Agriculture Stabilization and Conservation Service (GAO/T-IMTEC-90-13, Sept.
18, 1990).

Information Resources: Management Improvements Essential for Key
Agriculture Automated Systems (GAO/IMTEC-90-85, Sept. 12, 1990).

Geographic Information System: Forest Service Not Ready To Acquire
Nationwide System (GAO/IMTEC-90-31, June 21, 1990).




Page 23                                                      GAO/T-AIMD-97-90
           Related Products




           Forest Service Not Ready to Acquire a Nationwide Geographic
           Information System (GAO/T-IMTEC-90-10, May 2, 1990).

           U.S. Department of Agriculture: Interim Report on Ways To Enhance
           Management (GAO/RCED-90-19, Oct. 26, 1989).

           Information Management: Issues Important to Farmers Home
           Administration Systems Modernization (GAO/IMTEC-89-64, Aug. 21, 1989).

           Department of Agriculture Needs Leadership in Managing Its Information
           Resources (GAO/CED-81-116, June 19, 1981).




(511426)   Page 24                                                    GAO/T-AIMD-97-90
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